Israel’s Oil Refineries Poised for Four-Year Low: Tel Aviv Mover

Oil Refineries Ltd. (ORL) headed for the lowest level in four years after Standard & Poor’s Maalot cut its credit rating, citing poor operational performance.

The shares dropped 4.7 percent to 0.963 shekel, the lowest level on a closing basis since February 2009, by 1:46 p.m. in Tel Aviv. Trading volume was more than double the stock’s three-month daily average, data compiled by Bloomberg show.

S&P lowered the rating to IlBBB- from IlBBB+ while putting it on CreditWatch, it said in a report released after markets closed yesterday. Oil Refineries is the worst performer on Israel’s benchmark TA-25 Index this year, plummeting 51 percent, after posting losses in each of the past eight quarters. The company has slumped 29 percent since a report in Calcalist on Oct. 3 that said bondholders will request a cash injection from majority-owner Israel Corp. to meet imminent debt obligations.

“The company’s operational performance is adversely affected by the low refining margins,” Matan Benjamin, the chief credit analyst at S&P Maalot, said in the emailed report. “The sharp drop in share prices and reduced accessibility to financing sources force it to act immediately to strengthen its liquidity profile, improve cash flow and find alternative financing sources.”

Oil Refineries is scheduled to repay $165 million of debt in the second half and about $330 million next year, S&P said in its report.

Israel Corp., which has a 37.08 percent stake in Oil Refineries, declined 1.6 percent to 1,831 shekels.

BP Plc (BP/)’s refining market margin, a benchmark indicator for global processing profits, slumped 30 percent to $13.60 a barrel in the third quarter, according to the BP’s website.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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